Yellen: Overseas turbulence won’t stop US rate hike this year

Turmoil in Greece, China and other overseas economies will not distract the Federal Reserve from plans to raise short-term interest rates later this year, according to central bank chief Janet Yellen.

She said conditions overseas are “not threatening enough” to the US economy to derail those plans.

The Wall Street Journal is reporting benchmark rates could go up in September, although many investors say a December liftoff is more likely.

Yellen, who was testifying before a congressional panel, said it’s better to proceed slowly with an interest rate hike than wait a long time and move aggressively to catch up if the Fed finds itself behind the curve in preventing the economy or markets from overheating.

Yellen focused on threats to the US economy from overseas, particularly Greece and China.

“China continues to grapple with the challenges posed by high debt, weak property markets, and volatile financial conditions,” she said.

Despite those risks, Yellen said the prospects are “favorable for further improvement in the US labor market and the economy more broadly”.

The Fed has set two conditions for raising rates-further improvement in the US labor market and signs that inflation is on a path to return to 2 percent after running below it for more than three years.

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